Saturday, December 15, 2012

The Real Fiscal Cliff

Today, the term "fiscal cliff" refers almost exclusively to two things that are scheduled to happen simultaneously at the end of this year.

The first is the expiration of the Bush tax cuts, which were originally scheduled to expire at the end of 2010 but were extended in bipartisan fashion for two more years due to the recession. Currently, Republicans wish to extend all the Bush tax cuts and Democrats, flush from their election victory, want to extend all of them except the cut on high earners, the one-percenters loathed by Occupy Wall Street and their ilk. If nothing is done by the end of the year, all our income tax rates will go up to what they were in the nineties during the Clinton administration. Oh noes!

The second thing scheduled to happen is usually called "sequestration", though I suppose that term will in the future be used to apply to other things, just as the term "fiscal cliff" has changed definition. (In fact, it has been used in the past to refer to other, less public things as well.) Sequestration is somewhat more complicated. In 2011, a law was passed creating a "super committee" of twelve representatives with equal representation by both parties tasked with hashing out a deal to cut U.S. government spending. The rise of the Tea Party had given the Republicans strong gains in the 2010 elections, including taking over the House of Representatives, and so the deal took place against a backdrop of Republican strength. Republicans had been refusing to raise the debt ceiling, basically the congressional limit on how much the U.S. government can borrow, if Democrats did not agree to spending cuts, and so the law stated that if the "super committee" was unable to come to an agreement on so-called spending "cuts" (usually "cuts" means slowing the rate of spending growth, not actual cuts in spending), then there would be automatic spending cuts of $1.2 trillion, half defense spending and half other spending, both spread out over ten years as most spending issues usually are, to balance the $1.2 trillion raise in the debt ceiling. These automatic spending cuts are together called "sequestration".

The sequestration deal was designed to be so severe as to compel the super committee to come to an agreement. However at the time I predicted the super committee would fail to come to an agreement, and was proven correct. Why? Supposedly half of the spending cuts were to affect Republican concerns, i.e. the military, and the other half Democratic concerns, i.e. everything else. But of course, military spending is only twenty percent of the U.S. government's budget, and on top of that, certain spending programs like Social Security are exempt from sequestration anyway. The sequestration was designed to look both severe and fair to both sides, but in fact it was neither.

Spread out over ten years, the sequestration cuts only about $120 billion a year, which has somehow been reduced to $110 billion for 2013, of which $55 billion in cuts goes to military and $55 billion to other non-exempt programs. This amounts to about ten percent of the current federal government budget deficit, meaning it is only ten percent of the amount the government must borrow every year, on top of tax revenue, to keep spending at its current rate.

To put this in perspective, let's say that Alice and Bob are a married couple whose joint income totals $100,000 a year. Let's say that Alice and Bob spend about $135,000 a year and every year must borrow $35,000 just to keep up this level of irresponsibility. Now a serious spending cut would be something more than $35,000 a year because Alice and Bob not only have to stop borrowing, they also have to start paying back what they borrowed. So Alice and Bob decide to cut $3,500 from their yearly spending which, at less than three hundred a month, will prevent them from buying one of the three new cars they purchase every year. Obviously this is not going to solve their problem. They would have to cut ten times as much in order to really start making a dent. $3500 is only about 2.6% of what they are spending every year.

Compared to our real spending problem, the sequestration cuts are nothing. On top of that, the Democrats were easily able to swallow the non-military spending cuts because most of their high priorities are already protected from sequestration, and besides the programs they defend are a much larger portion of the budget. In other words, both sides lose something in the automatic cuts, but the Democrats calculated the Republicans lose more. So the automatic cuts amounted to a win for them. The sequestration designed to force an agreement actually favored the Democrats, and so they had no motive to compromise. This was borne out in the negotiations, during which Democrats sought a better deal for their interests than the automatic cuts, and Republicans wrongly assumed they would be forced to make a deal. Republican leadership is not pushing hard enough, and I am not the only one who thinks so.

So those are the two things everybody nowadays is calling the "fiscal cliff." It's nothing more than a natural consequence of the compromises our government has been making for decades. Republicans get tax cuts and Democrats get spending. The so-called "fiscal cliff" is a reverse of this dynamic: taxes will rise and spending will be cut. And so the politicians conspire to convince us they are paying attention and finally being responsible, but in the mean time they have taken a term which used to mean something far worse and applied it to a minor detail. The end result will be we might go over this so-called "fiscal cliff", not much will happen, and everyone will say, "Hey that wasn't so bad." And one of the few buzzwords in politics today that favor conservatives will be diluted.

When the term "fiscal cliff" started getting thrown around several years ago, it did not refer to the expiration of the Bush tax cuts. When the Bush tax cuts were due to expire at the end of 2010, nobody called that the "fiscal cliff". The sequestration deal didn't even happen until 2011. So what did the term fiscal cliff refer to? In fact, it used to refer to the disparity between projected government liability due to entitlements and projected revenue. The current so-called "fiscal cliff" ignores entitlements almost completely. Here are two articles from 2008 and 2009 referencing the real fiscal cliff as it used to be understood. I had to search NRO because I couldn't make Google do an actual search of older articles. Most every article I could find had old dates associated with them but were actually written within the last couple of years. Here is Paul Ryan discussing the real fiscal cliff, which has nothing to do with what's being thrown around the news cycle today:

"More people are retiring. Baby boomers are retiring. We're going from 40 million retirees to about 77 million retirees. And because all these three programs [Medicaid, Medicare, Social Security] are what we call pay-as-you-go programs, current workers paying current taxes to finance the benefits for current retirees, what that means is, when you have a 100 percent increase in retirees but only a 17 percent increases in workers filing into the system, because birth rates are lower than they were in the baby boom times, you have a huge problem.  Combine that with health inflation. Health inflation meaning the cost increases in Medicare and Medicaid go up about 6 to 7 percent a year. So you combine demographics with health inflation, and these programs grow at a unsustainable levels to, literally, by the time my kids are my age just those three programs, Social Security, Medicaid and Medicare consume all federal revenue."

In other words, when all the journalists and pundits talk about "going over the fiscal cliff" at the end of the year, it is mostly hype. The little problem they are talking about is meaningless next to the trillions of dollars of unfunded liabilities which the government has promised to its citizens in the form of guaranteed benefits. By most calculations, we would need over $100 trillion in cash right now and be able to invest it at six percent interest in order to cover these future liabilities. Obviously that is not going to happen. This is the real fiscal cliff. Don't let anyone tell you otherwise. So what will happen?

Well, either people will stop getting their government paychecks, or worse, the government will continue printing money to cover its liabilities, causing inflation and the loss of value not just of government paychecks but every paycheck. We don't know precisely when it will happen, but there is no question that it will happen within my lifetime (I am thirty) unless we deal with the problem responsibly. There are essentially two options for going forward. We can blindfold ourselves and just let the inevitable happen, or we can deal with reality and try to fix the problem.

The blindfold option is politically popular. Our government is becoming a near complete democracy, and unfortunately nobody wants to reduce their own cash flow for the greater good. Most, including supposed conservatives, are engaged in an extended run on the government bank. Everyone is trying to get as much out of it as possible before the whole thing blows up in our faces. That is, at least, those who see it coming. Most don't. But what's the harm?

Well, what happens when 300 million people suddenly don't get what their government promised them?  What happens when our money becomes worthless? That sort of situation is called "political instability" to put it mildly, not to mention the fact that most other western nations are facing the exact same situation. Historically, this has meant revolution, war and all sorts of unpleasantness far worse than taking a pay cut right now. We like to blame our politicians for this, but how many of us ask our politicians to reduce the money the government is paying us? Clearly, not enough are, and for obvious reasons. Everybody wants theirs, and until we stop and consider the long term the real fiscal cliff is coming, and it will make the fake one look like falling off a StairMaster.

Now that's whack.

Wednesday, December 5, 2012

A Fishy Ceasefire

Anyone familiar with the decades old conflict between the Palestinians and Israelis is also familiar with the concept of a ceasefire. A ceasefire is a cessation of hostilities that guarantees more hostilities in the future. War is the last resort of conflict resolution. It is used when all other avenues of conflict resolution fail. Beyond war, there are no other options. Consequently, if the war fails to resolve the conflict and ends in a ceasefire, rest assured the conflict which caused the war was not resolved and there will be war again.

When I was a grade schooler, people used the catch phrase "peace in the Middle East" if they were put in a position between two people in an argument. It was catchy because it rhymed, but it also signified something else. It was funny, because it assumed that the peace would be temporary, and the person saying it just wanted the argument to stop so they weren't required to listen to it anymore. In other words, when someone came into the middle of someone else's argument and said, "Peace in the Middle East", it was primarily something that everyone except the two combatants wanted. It meant, "People are getting annoyed that they have to watch you do this." It meant, "Take it somewhere else where we don't have to watch." It meant the majority of people around were imposing their will on two opposing interests because they wanted peace and quiet, not because any resolution of the conflict occurred. Of course, it was also meant ironically. Even fifteen years ago everyone old enough to attend school without crying for their mommy knew that peace in the Middle East was a pipe dream.

The recent ceasefire between the Palestinians and Israelis belongs to a long line of such ceasefires and uneasy truces. However, to this practiced observer of the conflict, this particular ceasefire smells funny. The only reason I can think of as to why it smells funny is that it happened much too quickly. In past conflicts, the Palestinians have had no reason to cease fighting. They really do not care too much about dying. In Islam, death in war against the infidel is honorable and desirable. On the other side, the entire world hurls its "peace in the Middle East" diatribe at Israel uselessly, because in most cases Israel did not start anything, and the conflict continues until the Palestinians run out of rockets and human shields. This time however, Hamas in the Gaza strip stopped willingly. To me this represents the introduction of an outside force influencing Hamas in the same way the United States influences Israel. They have an ally now, and this trusted ally asked them to stop for a reason.

The new ally is Egypt, which is now controlled by the Muslim Brotherhood, Hamas' parent organization. Mubarak, a dictator who kept the peace Egypt had formed with Israel in the 70s and considered a puppet of the United States, is no longer in charge. As long as the Muslim Brotherhood is in charge of Egypt, and trust me when I say they will never relinquish power without a civil war, they must be considered a staunch ally of the Palestinians. The new Muslim Brotherhood President Mohammed Morsi negotiated the ceasefire between the two combatants.

So great right? Now that the Palestinians have an ally they can trust who will tell them to stop fighting we can have peace in the Middle East? Well, there's just one problem: the original conflict has not been resolved.

The Israelis want to live in peace. They have no patience with a world that has been killing and oppressing them for thousands of years since the Diaspora and before. They will do whatever they feel is necessary to enhance their security.

The Palestinians want all the Jews dead and/or gone and of secondary concern is possession of their land and statehood.

These two aims are fundamentally incompatible, and there will be violence until one or the other is satisfied. Period.

Morsi and the Muslim Brotherhood need time to consolidate their power in Egypt and turn it into an Islamic theocracy. The only way they could have convinced Hamas to cease hostilities, and to convince themselves, is to reassure Hamas that once Egypt is firmly in their grasp they will be in a far better position with respect to Israel and also the United States. Probably the most important thing to understand about Egyptian politics is the country's dependence on foreign aid, including $1.3 billion a year from the U.S. Obama threatened to remove this aid to convince Mubarak to step down. Whenever the United States wants something from Egypt, they dangle that aid and threaten to snatch it away. $1.3 billion is a lot of money in Egypt, enough to keep a group of people in power who have little or no popular support. However, if a group with majority popular support was in clear command of Egypt, they could act with impunity. And if this group was anti-U.S., removal of U.S. aid could actually help them politically. They could then blame even more of their problems on the United States, just as they have been blaming their multiple crushing losses to Israel on the United States. A few years of clear control and a few billion U.S. dollars could be all they need to start another war or round of wars with Israel. At the very least Morsi could pretend to negotiate with Hamas, claim he failed, and secretly give them the go ahead to do all the damage they can with the full backing of the newly Islamist Egyptian state and military.

So there are two ways to see the ceasefire:

1) Peace in the Middle East.

2) The calm before the storm.

If history and the logic of war is any indication, the second is far more likely.

Now that's whack.

Sunday, December 2, 2012

The Paddywhack Platform

I wrote this quite awhile ago and have edited and updated it. It's meant both as public policy prescription and sometimes just to offer suggestions to private entities. I hope it's not too difficult to tell the difference. I'll post this on the forum (link on the sidebar inviting comments) shortly so stop by and tell me what you think! I am of course open to suggestions and revisions.

  1. Budget
    1. The highest priority of any government will be to balance the budget. The government may save up surpluses for emergency spending issues. If any priority is higher than balancing the budget, spending must necessarily get out of control and this is unacceptable.
    2. Government spending and revenue will be limited to 20% of GDP.  No exceptions, including military spending. If an emergency requires more spending, this money is to be raised through issuance of bonds (debited from future budgets automatically as they come due), donations or raising money in other ways, not increased taxes, borrowing from foreign countries or printing money.
  2. Healthcare and entitlements
    1. Obamacare will be repealed.
    2. Ask Paul Ryan.
  3. Immigration
    1. The borders must be secured and we must work with the Mexican government to reduce violence on their side. U.S. military ground, naval, air, space and cyberspace forces are authorized as necessary to secure the border. In the same way as the Coast Guard, a branch of the military, guards our coastal borders, the rest of the military will guard our land borders. This is a right and proper use of the U.S. military if there ever was one. No other immigration provision will be enacted until this provision is completed. If laws cannot be enforced, it is meaningless to change them.
    2. All illegal immigrants living in the United States at the time of implementation will be allowed to apply for citizenship in the same manner as any foreigner living outside the U.S. would be. 
    3. The federal minimum wage will be eliminated and other regulations will be modified so state government may allow immigrant and other workers to continue to work for market controlled wages and benefits as they have been while illegally residing in the United States.
    4. The yearly immigration limit into the United States will be increased to at least five million legal immigrants per year, including those applying for citizenship under b. In a time when the birthrates of modern industrial powers is declining, the United State should count itself lucky to have so many immigrants wishing to live here. Economic success has historically depended on population growth and the modern world is no different. In many cases the best option for the world’s poor and downtrodden is to immigrate to the United States, and therefore this provision satisfies humanitarian concerns as well. This provision may require increased funding to the INS and other government agencies.
  4. Foreign aid
    1. Foreign aid will only be allowed for countries with 75% or more of their population living on subsistence farming or less. All other foreign aid, including military aid, will be stopped immediately. No exceptions except under b.  
    2. In the case of aid, either humanitarian or military, to volatile or unstable countries or regions, aid will be reduced 10% in two years, 20% in four years, 30% in six years and 40% in eight years for a total of 100% reduction in no less than eight years, unless of course said country or region falls under point a.  
    3. Funding for all organizations engaged in foreign aid will be phased out as soon as tax cuts can be approved in equal amounts. Private, non-profit organizations are far better at helping the world’s poor than government, tax-funded organizations because in nearly every case they have lower overhead costs. If executed properly, this provision will likely increase the amount of aid the people of the United States provide for the world’s poor. This draw-down of government funding for humanitarian concerns must coincide with a draw-down of tax revenue so the American people themselves through their own proven spirit of generosity can use the extra money to help the world’s poor without the limitations of government bureaucracies.  
  5. Foreign policy and military policy
    1. War is the last resort for conflict resolution. War will be pursued only when all other prior conflict resolution methods have failed. The purpose of war is permanent conflict resolution. It is unsuited to all other purposes. The military is an instrument of war, and like war, it is unsuited to all other purposes. If a war cannot or will not provide a permanent resolution to the conflict, it should not be pursued. This determination requires a clear statement of the reasons for the war, the goal of the war, and the strategy being employed to reach that goal.  If the determination can be made that conflict resolution is possible through war, and war is the only possibility, then it must be pursued to the end. When the United States makes the decision to go to war for any reason, the goal of the war must be a decisive victory aimed at permanently resolving the conflict over which the war was fought. When the goal is reached, and not before, the war will be declared over, and U.S. military forces will be withdrawn immediately and be moved quickly into full compliance with the other points of this policy.
    2. The U.S. will commit to protecting the territorial integrity of NATO members, Israel, South Korea, Japan and other nations considered as U.S. allies. Military aid in any form will be restricted to instances in which these allies are invaded by a foreign hostile force. The U.S. will not maintain military aid or presence for allies during peace time. The U.S. will not intervene in civil wars or other wars which do not involve these allies for any reason, including humanitarian.
    3. The U.S. will remove all military forces from around the globe which are there for no reason or whose only purpose is to project U.S. military power across the globe for undefined future conflicts.  The primary examples are U.S. bases in Germany, Saudi Arabia and Persian Gulf countries, Japan and South Korea.  If a threat to NATO occurs the U.S. will deal with it when it occurs and will require permission and assistance from any host countries near to the hostilities.  The new NATO is a line in the sand which once crossed will be enforced with all the power the U.S. and its allies can muster. But until it is crossed the United States military will not be used as a global police force and will not be held in a constant state of mobilization and/or deployment.  
    4. The U.S. will no longer engage in “nation building” regardless of the reason. The imposition of a stable government in any particular country will be viewed as the responsibility of the citizens of that country, not the responsibility of the United States or the “international community”. The current missions in Iraq and Afghanistan will not be affected by this provision on the understanding that those missions will be ended in a reasonable amount of time.   
    5. The U.S. policy towards terrorism will be treated as an international law enforcement problem requiring no organization other than the cooperation between the national governments of countries affected. No wars will be justified by the excuse of fighting terrorism in a host country, however offensive and temporary special operations missions will still be allowed with or without host country authorization.
    6. Peace-time defense spending will be reduced to reflect the reduced peace-time mission of the United States military.  This provision will be enacted immediately with exceptions for Iraq and Afghanistan spending.  These exceptions will expire once the current missions in Iraq and Afghanistan are completed.  
    7. The U.S. will cease primary military and monetary support for the U.N.  The U.S. will contribute military and monetary support for the U.N. equal to the amount of the highest non-U.S. contributor in each category unless and until the United States economy falls below second in the world, in which case the United States contribution will be lower. Any U.N. resolutions which would require a higher contribution from the United States are to be rejected out of hand for more manageable goals.
    8. Nuclear policy – Nuclear policy will depend on Mutual Assured Destruction and not the prevention of nuclear proliferation.  Efforts to prevent nuclear proliferation will not of course be ended or even reduced.  However in accordance with the new war policy no wars will be declared in order to enforce non-proliferation policies.  Again, offensive and temporary special operations may be approved similar to e.
    9. A sixth branch of the military will be created called Space and Cyberspace Command, or SPACERS Command.  This command will be in charge of all U.S. military and national security concerns in space and the internet.  Clear guidelines on internet freedoms accorded to U.S. citizens will be established.  SPACERS is primarily concerned with national security on the internet, and this is intimately related with satellite communications networks.  This includes any cyberspace intrusion into U.S. government networks as well as any foreign espionage or terrorism which occurs in cyberspace. SPACERS will assimilate various assets of NASA as well as existing space and cyberspace government and military resources according to this mission statement and the U.S. constitution.
      1. All SPACERS operations will be offensive in nature, with the obvious exception of protecting its own assets. Defensive operations must be the mandate of private companies and individuals as before. This provision will both allow current cyberspace security organizations to remain in business as they are as well as to protect against government intrusion upon the traditional freedom under which the internet has operated. This provision is also a simple recognition of the nature of cyberwarfare. Offensive operations by SPACERS will focus on those forces, be it states, organizations or individuals, that have attacked the United States and her interests in cyberspace.
      2. Cyberwarfare will be conducted under separate Rules of Engagement, much like the difference between nuclear, conventional and special ops warfare.  A cyberwar should not necessarily precipitate a conventional or nuclear war, but should either occur of course cyberwarfare may also occur. If the United States is attacked in cyberspace, SPACERS Command will respond in kind with offensive operations. Cyberwar once declared shall have no limitations except that it take place in cyberspace only and directed against a specified target for specific reasons and towards specific goals as under a.  
    10. The National Guard will be returned to the control of state governments and will no longer exist as an arm of the federal government but will instead be once again a system of state government operated and controlled militias. No exceptions. All federal funding will immediately cease and states must each on their own decide whether to pick up the tab or not.
  6. NASA
    1. NASA will be dissolved and its assets either eliminated, such as the areas associated with climate research and extraterrestrial biology, or divided and distributed to various organizations as is appropriate.
    2. All of NASA’s funding will be immediately eliminated and reevaluated.
    3. Assets useful for national security will go to the newly created SPACERS Command. Assets which go to SPACERS Command will be funded in a similar manner as they were before and added to the budget of the Department of Defense. SPACERS Command will receive priority on all NASA assets relating in any way to their new mission statement.
    4. Remaining assets useful for scientific research and not useful to SPACERS will be distributed to academic organizations capable of running those research programs as normal academic programs receiving funding in the normal academic manner. Again this will occur on a case by case basis and only if academic institutions step forward who are interested in taking over these types of programs.  
    5. Any fiscal advantages obtained from the elimination of NASA will be used to pay down the national debt.  
  7. Education
    1. The Department of Education will be phased out. Education of citizens will become the responsibility of state governments or private enterprise and no national educational standards will be enforced. Education in the United States will change from an attitude of compliance to an attitude of excellence.  
    2. State governments are highly encouraged to develop sustainable educational models given budgetary constraints, with the goal being fully self-sustaining educational models which can then be disconnected from the government entirely. Throwing more public money at education does not work. It is time for new ideas, and the legal restrictions governing all public funding of education are a hindrance to innovation in education, just as they are in other sectors of society. This disconnection is also attractive due to concerns over religious liberty.
  8. Marriage
    1. All legal references to the term “marriage” will be replaced with the term “civil union” and refer to an agreement between any two individuals. All laws concerning marriage will remain the same.
    2. Churches will be the sole determiner in what constitutes a Biblical marriage and what does not, since the term “marriage” has been divested from its legal implications. Religions other than Christianity may of course use their own definitions. Marriage is a Christian and a Biblical concept, and if the government cannot for legal reasons uphold the right definition than Christians should boycott government marriage. It is hoped that by changing the legal name of government marriages to civil unions this controversy can be avoided.
    3. Christian marriage counseling will always include advising couples to read the Bible and pray together daily. This criteria has been shown to change marriage from a coin flip (50% divorce rate even among Christians) back into a covenant until death (nearly 100% success rate). This provision is of course a suggestion only and will not be enforced by any government.
  9. Abortion
    1. A human life will be legally defined by scientific and philosophical means. A human life begins when a new set of DNA existing within the context of a cell has the potential to develop into a member of the species Homo sapiens. Any life which fits this definition will have all the legal and other protections legally understood as being extended to human beings.
    2. According to a., rape and incest are not exceptions allowing abortion. Rape and incest are crimes. Rape is a crime of one person against another and incest is a crime committed by more than one person, but in neither case has any unborn child committed a crime for which they can be legally punished, much less given the death penalty.
    3. In the case of the health of the mother, in no other point of law is it suddenly legal to kill someone against their will to protect the health of another person. Therefore this is not an exception to legalize abortion.
    4. In the case of the life of the mother, it seems obvious that when the lives of both the mother and child are at stake then both ought to be considered equal under the law. If it is necessary to kill the mother to save the child or vice versa, then that decision must be made by the mother or next of kin or doctors in the same way as any other dual life-threatening medical decision such as operations to separate conjoined twins. In most cases, the choice is not so stark and stringent medical guidelines will be established governing under what circumstances abortion or similar medical operations are legal under this provision.
    5. All government funding for embryonic stem cell research will be immediately revoked and become funding for adult stem cell research, which is not only morally unobjectionable but also has provided far more actual advances in healthcare then anything accomplished by embryonic stem cell research.
    6. Cryogenic storage of human embryos will be illegal because it constitutes a death penalty and cruel and unusual punishment of a human being.
    7. In vitro fertilization will be made illegal due to the loss of human life required for a successful procedure. There are plenty of children in the world in need of adoption for couples unable to conceive naturally or using other fertility methods.